Chilly times in Iceland

A good friend of mine, the Norwegian journalist Kristine Lowe, reflects on a recent trip to Iceland, which has seen its government collapse amid the credit crunch. Iceland has, of course, benefited from sensible low-tax policies as well as being buoyed by what now appears to be some foolish banking lending policies.

I am not sure I would want to live there, mind. The long nights and expensive beer would drive me nuts.

January 28th, 2009 |

9 comments to Chilly times in Iceland

Actually, under the current circumstances a beer in Iceland is pretty cheap – for a foreigner, that is (my photgrapher was over the moon to be paid in foreign currency) – or at least for a Norwegian:-)

But I share your sentiment: my first thought when I landed was why on earth the Norwegian vikings who settled the island didn’t turn around, or, seeing the turmoil back home, sailed on. But I was told the Vikings did their bit to create the current “moon landscape”, apparantly there were forests at the island when they arrived. Still, it didn’t get light until midday and was chilly and gloomy, but the people were fun. I’ll be blogging a bit more about my journey to the saga island, though tomorrow me thinks – in conjunction with a story I’m writing now.

By “low tax policy” what is meant is “slightly less wildy high than Britain”.

However, Iceland is yet another example of that old law of economics (real economics – not what is taught in the schools and universities) “if the money is bad everything else will go bad”.

The depressing thing is that the government of Iceland did not do nothing wrong – if one follows the ideas of monetary policy taught in academia and spread by the establishment media.

For example, this week’s “Economist” magazine has a feature on banking (not an article, a whole section of the magazine) – but problems are blamed on “animal spirits” and too much trust in mathematical models. There is not a word on how increasing the money supply distorts the capital structure, or how fractional reserve banking magnifies a government increase in the money supply.

Even things like the collapse of Long Term Capital Management (the scheme set up by Nobel Price winning “economists”) does not raise any questions in the minds of the writers of the section – and readers are told that “Wall Street” (not Alan Greenspan of the Federal Reserve Board) bailed the thing out – and the role of Greenspan’s endless bailouts in pushing the credit/money bubble larger and larger is ignored.

This is not just “Paul Marks slagging off the Economist again” the magazine faithfully reflects what university academics describe as “free market liberalization” – and people like those who made up the government of Iceland would have no idea that they were not acting in a free market way whilst a credit money bubble was being built up.

This is the heart of the success of the left – they control both sides of the “debate”. They, of course, control their own side – but they control the “free market alternative” as well. I have said this for so many bitter years (and being called “paranoid” and worse) – but the bailouts (or rather the “free market” support for the bailouts) has brought it into the open.

People who support bailouts and “stimulus plans” are not free market – and whilst such establishment voices are given the place of the “free market side of the debate” in most universities and in the media, the West has no chance of recovery.

Then same politician gives out billions of welfare to the banks, “to sustain the economy.”

The reason the banks are getting welfare handouts is not because of “socialists”.

Its because the British and American governments are full of bankers. What a surprise that the likes of Greenspan, Paulson, Bernanke, Geithner want to give bailouts to bankers, as they are bankers and most of their friends are bankers.

I think Iceland and Greenland were settled in times that were warmer than we think of as ‘normal’- the Medieval Warm Period. Greenlanders think that AGW guarantees them warmer climates. Here’s hoping they’re wrong!

Now there’s a man who knows how to get to the crux of the matter. Must admit I chucked bills with alcohol on as I can’t use them for my accounts, against the law here, except my hotel bill says 450 ISEK for a bottled beer, for whatever it’s worth. Think a pint might have been 200-300 something, only had two (was parachuted there in last minute, so almost work 24/7) Exchange rates here http://www.landsbanki.is/english/markets/exchangerates/ not sure how updated this beer price guide is, might be an indication

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